And it is attracting CRE investors of cannabis-friendly properties
Pelorus Equity Group, a cannabis-focused investment firm, has converted its existing debt fund to a private mortgage real estate investment trust (REIT) to expand its loan portfolio across the US.
The firm said that the move aims to grow its marijuana loan portfolio in medically licensed states where there are increasing demand for cannabis lending.
Commercial real estate professionals also reported greater demand for properties, such as warehouses and storefronts, to be used for legal pot storage, according to a recent study from the National Association of Realtors.
"We are generating near equity-like returns with a debt fund that is secured by commercial real estate that allows for cannabis use tenants," said Rob Sechrist, president of Pelorus Equity Group.
Additionally, Pelorus increased the offering size of the fund from $100 million to $250 million, which will be distributed monthly instead of quarterly.
In 2019, Pelorus recorded an annual growth of 15.5% internal rate of return (IRR), as well as a 20.4% IRR and $150 million for new closings in 2020.
"As our portfolio diversifies and our ventures attract increasing investor interest, we want the ability to stay flexible to all opportunities while providing our current and future investors with as many tax benefits as possible with minimal disruptions," said Pelorus CEO Dan Leimel. "Even in periods of market volatility, industry research points to businesses finding more success in raising funds for REITS than for traditional LPs or LLCs vehicles. Adding a mortgage REIT allows Pelorus to optimize efficiency and returns as we continue our growth in the cannabis market."
